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Viral fears and view of the next economy

Social distancing is the go-tophrase and instrument to counter transmission of Covid19 virus.

Published: 15th March 2020 04:00 AM  |   Last Updated: 15th March 2020 08:42 AM   |  A+A-

Coronavirus

People wearing masks as a precautionary measure to avoid coronavirus. (Photo | EPS)

Social distancing is the go-to phrase and instrument to counter transmission of Covid19 virus. As with medication and interventions it comes with contra-effects. The socialisation of don’t touch-meet- engage-travel advice, leads to paralysis of economic activity, imposes costs on individuals and nations and has triggered a cascade of consequences. 

The potential cost of the economic shutdown brought down world markets and the precipitous slide of the markets aggravated the sense of uncertainty and fear. The flight of capital to safety, witnessed across global markets this week, sent central banks and governments scurrying to their treasury chests to preclude what was first seen as a liquidity crisis from morphing into a calamity of solvency. 

Every crisis also arrives with its own window for reflection. As William Gibson famously said, ‘the future is here’ and is waiting to be embraced. The instruments of mitigation afford a glimpse of the next economy and dare one say, even the next society. Change comes at inflexion points in history, this is such a cusp and the world is inexorably and structurally transitioning to new ways and systems. And the signs are manifest in the tactics which could be strategies for the future.

This week, Harvard University told students it’s moving all classes online starting March 23 in response to the COVID-19 outbreak in the United States. Students would attend virtual classes and be assessed for credit as usual. Conceivably created capacity could be converted into a template for expansion and a parallel stream for graduate courses.

It is estimated that over 200 million students are enrolled in graduate classes across the world — a catchment worth tapping into at lower costs to the student and the university. It is not just education. The idea of ‘going to work’ has been morphing for some years. On Friday, AT&T CEO Randall Stephenson, sent a memo to all employees, 245,000 of them, asking them to work from home as Covid19 spreads across the globe. To be sure AT&T is not the only corporation to advice so — Amazon, Google, Twitter Spotify have all mandated so.

This temporary tactic could arguably form the basis for future strategies for expansion and staffing. Sure, there could be downsides — of accountability and productivity — but these will be weighed in consonance with operational costs. The potential fall in footprints has consequences not just for the future of commercial space but also the scale economics of mobility and infrastructure — particularly governments planning/ executing mass transport corridors. Already a large segment of urban commercial space is emptying thanks to the loss of shoppers who have gone online. 

Fear of transmission has also halted court work. On Thursday, the highest court of Switzerland directed that all public hearings be postponed. In Italy, all court proceedings are suspended. In Ireland and Vietnam, all courts have been shut for March. In Canada, the Ontario Superior Court of Justice has suspended jury selection for trials till further notice. In the United States, federal courts in Manhattan, Massachusetts and Connecticut ordered the suspension of all jury trials scheduled to begin. Ostensibly, the expectation is of early restoration of normalcy.

That said, delays will catalyse thinking on alternate methods of judicial processes involving induction of technological solutions — for instance, live-streaming of proceedings, use of online platforms for civil litigation, submission of arguments online for final hearing in the court, and as with bail hearings, video trials could be the next thing in geographies not following the jury system. 

At another level, companies are banning travel and governments have blocked inward and outward travellers — consequently the S&P Supercomposite Airlines Industry Index, including SkyWest, United, Delta et al sank — as much as 17 per cent on Thursday alone, the biggest since 9/11. Companies are designing methods of remote engagement and delivery of services. Clearly this is temporary but it gives a glimpse of what could be and opens up the potential for enterprises facilitating remote business engagements. 

Change is also arriving at governments for governance. The approach on how to deal with welfare needs is poised for change. Employees unable to attend work due to the need to be in isolation/quarantine and workers in the gig economy are badly hit. There is a rising clamour for compensation. The consensus opinion is in favour of direct income support to those affected — a la the Aadhaar enabled direct benefit transfer system. The debate on universal basic income will be revived and customised to suit context and geography. 

There are many more domains which are poised at the cusp of change — and the advent of 5G, and IOT systems will only accelerate the shift. The viral fears, the epidemiology and the epistemology in the ongoing crisis affords economies the opportunity to peep into the window for a view of what the future could be like. 

To paraphrase poet Matthew Arnold, we are between two worlds, one that is ebbing and one that is rising on the horizon.

shankkar.aiyar@gmail.com

SHANKKAR AIYAR - Author of Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India

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